Diageo Shares Spike On Talk Of Moët Hennessy Taking Back Stake

Diageo’s shares spiked early in yesterday’s trading on the New York Stock Exchange, amid rumors that Moët Hennessy was seeking to buy back the 34% stake that Diageo owns. Roughly one hour into Wednesday’s trading, Diageo’s share price rose by nearly $2—to approximately $119—after rumors broke that Moët Hennessy would try to reacquire the minority interest that Diageo has long held in the French drinks group, in which luxury goods giant LVMH controls the remaining 66% stake.

This rumor marked a reversal from those of years past, which focused on Diageo aiming to raise its stake in Moët Hennessy in an effort to gain control of the Paris-based marketer, which owns Hennessy Cognac and is also a dominant player in Champagne with its Moët & Chandon and Veuve Clicquot brands. Those rumors cooled of late, however, as conditions in China—where Diageo and Moët Hennessy have a joint marketing venture to handle top-selling import brands like Hennessy and Johnnie Walker—took a turn for the worse amid austerity measures.

Diageo’s shares dropped a bit after the morning spike, but still finished the day up 0.7% to $118.

It was the second time in recent days that Diageo shares were boosted by M&A talk. On June 6, the spirits giant’s shares jumped 8% on rumors that it was being targeted by Brazilian billionaire Jorge Paulo Lemann’s 3G Capital. However, analysts are skeptical that 3G—controlling shareholders in brewing behemoth Anheuser-Busch InBev—will make a play for Diageo, for which a bid could surpass $75 billion.

Tagged : 3G, Anheuser-Busch InBev, Diageo, Hennessy Cognac, Johnnie Walker, LVMH, Moet & Chandon, Moet Hennessy, New York Stock Exchange, Veuve Clicquot

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